Independent Panel Finds Grizzly’s Allegations Unfounded – EV
On June 28, research firm Grizzly Research listed NIO as a Short following the report in which the company said the electric vehicle maker was “likely using an unconsolidated related party” to inflate its revenue as well as its profitability.
The company announced on Friday that the independent committee of the board of directors has concluded that these allegations are unfounded.
“NIO Inc. (NYSE: NIO; HKEX: 9866; SGX: NIO) (“NIO” or the “Company”), a pioneer and market-leading company in the premium intelligent electric vehicle market, today provided an update on the status of the previously announced independent internal review.As previously reported, shortly after the release of a report issued by short selling firm Grizzly Research LLC on June 28, 2022 (the short seller”), an independent committee of the board of directors (the “independent committee”), composed of independent directors, Mr. Denny Ting Bun Lee, Mr. Hai Wu and Ms. Yu Long, was formed to oversee a Independent Internal Review of Key Allegations in the Short Seller Report (the “Internal Review”) The internal review was conducted by the Independent Committee with the assistance of third-party professional advisors, including a international lawyers and forensic accounting experts from a ca reputable forensic accounting firm who is not the Company’s auditor. The internal review is now substantially complete. Based on the findings of the internal review, the independent committee concluded that these allegations were not substantiated”.
On July 11, the electric vehicle maker said it had decided to “form an independent committee, comprised of independent directors, to oversee an independent investigation into the allegations made in the short sellers report.” NIO added that it will provide updates on the independent investigation in a timely manner as required by the applicable rules and regulations of the three exchanges.
“The Independent Committee has engaged independent professional advisers to assist with the independent investigation, including an international law firm and a reputable accounting firm,” the company added.
In addition, NIO also reiterated its “continuing and unwavering commitment to maintaining high standards of corporate governance and internal control, as well as transparent and timely disclosure in accordance with applicable rules and regulations.”
As a first reaction, the electric vehicle maker responded the next day after saying the report “contains numerous errors, unsubstantiated speculation and misleading conclusions and interpretations”.
BE THE FIRST TO RECEIVE NEWS
NIO’s first statement
“The report is without merit and contains numerous errors, unsubstantiated speculations and misleading conclusions and interpretations regarding information relating to the Company. The Company’s Board of Directors, including the Audit Committee, is reviewing the allegations and considering the appropriate course of action to protect the interests of all shareholders. The Company will make additional disclosures in a timely manner as required by applicable rules and regulations of the Securities and Exchange Commission, the New York Stock Exchange, the Stock Exchange of Hong Kong Limited (the “SEHK”) and the Singapore. Limited (the “SGX-ST”),” NIO wrote.
“The Company underscores its continued and unwavering commitment to maintaining high standards of corporate governance and internal control, as well as transparent and timely disclosure in accordance with applicable rules and regulations,” the company concluded.
During a Twitter space organized after the publication of the report, the CEO of the research company Siegfried Eggert answered a few questions from investors and enthusiasts of the electric vehicle sector. When the CEO of Grizzly Research was asked how many vehicles NIO has on the roads to date, he replied “100,000 vehicles”.
While we don’t know the exact number of vehicles NIO has delivered as of June 28, it’s certainly far more than the 100,000 mentioned by Grizzly Research. On April 7, 2021, the company announced the production of the 100,000th vehicle. Six weeks ago (May 15), NIO delivered its 200,000th vehicle and ended the month with cumulative deliveries of 204,936 vehicles – after delivering 7,024 units in May 2022.
In fact, the number mentioned by Grizzly Research was reached 14 months ago (April 2021) and the electric vehicle manufacturer should have around 215,000 to 217,500 vehicles on the road, which is 115,000 more than the number indicated by the author of the report.